Japanese Standards (Consolidated) Isetan Mitsukoshi Holdings Ltd. August 10, 2012 Securities code: 3099 (Listed on the First Section of Tokyo Stock Exchange and Fukuoka Stock Exchange) (URL: http://www.imhds.co.jp) Representative: Hiroshi Onishi, President and Representative Director Contact: Kazuo Takiguchi, Executive Manager, Investor Relations Corporate Administration Div., Administration Headquarters, Isetan Mitsukoshi Holdings Ltd. TEL: (03) 5843-5115 Scheduled date of filing of the quarterly financial report (Shihanki Houkokusho): August 13, 2012 Scheduled date of dividend payments:- Preparation of quarterly results supplementary materials: No Convening of quarterly results explanation meeting: No (Figures are rounded down to the nearest million yen) 1. Consolidated Business Results for the First Quarter of Fiscal 2012 (From April 1, 2012, to June 30, 2012) (1) Results of consolidated operations (cumulative) (Percentage figures indicate changes from the previous year) Net Sales Operating Income Recurring Income Net Income Millions of yen % Millions of yen % Millions of yen % Millions of yen % 1Q of FY2012 290,360 0.1 6,905 38.1 10,680 34.3 6,071 (64.1) 1Q of FY2011 289,951 0.2 5,001 205.9 7,949 36.6 16,896 - Note: Comprehensive income (loss): 1Q of 2012: 12,403 million (-30.5%), 1Q of 2011: 17,852 million ( %) Net Income per Share (Basic) Net Income per Share (Diluted) Yen Yen 1Q of FY2012 15.39 15.35 1Q of FY2011 42.83 42.80 (2) Consolidated financial position Total Assets Net Assets Shareholder s Equity Ratio Millions of yen Millions of yen % 1Q of FY2012 1,206,308 476,872 38.5 FY2011 1,227,947 468,479 37.2 (Reference) Shareholders equity: 1Q of FY2012: 463,974 million yen, FY2011: 456,583 million yen 2. Dividends Annual Dividends (Record date) First Quarter Second Quarter Third Quarter Year-end Total Yen Yen Yen Yen Yen FY2011-0.00-10.00 10.00 FY2012 - FY2012 (Forecast) 0.00-10.00 10.00 Note: Revision to recently announced dividend forecast: No 3. Forecast of Consolidated Results for Fiscal 2012 (From April 1, 2012, to March 31, 2013) (Percentage figures indicate changes from the same period of the previous year) Net Sales Operating Income Recurring Income Net Income Net income per Share Millions of yen % Millions of yen % Millions of yen % Millions of yen % Yen Half Year 583,000 (0.1) 7,500 (17.1) 14,000 (10.9) 9,000 (56.3) 22.81 Full Year 1,240,000 0.0 25,000 4.9 38,000 (1.2) 29,000 (50.8) 73.51 Note: Revision to recently announced consolidated results forecast: Yes
*Notes Isetan Mitsukoshi Holdings Ltd. (3099) (1) Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in changes in scope of consolidation): No (2) Adoption of special accounting treatment used in preparation of the quarterly consolidated financial statements: Yes (Note: For details, please refer to supporting data. 2. Summary Information (Notes) (2) Adoption of special accounting treatment used in preparation of the quarterly consolidated financial statements on Page 5.) (3) Changes in accounting policy, changes in accounting estimates or restatement due to correction 1) Changes in accounting policy in line with revision to accounting standards: No 2) Other changes: No 3) Changes in accounting estimates: No 4) Restatement due to correction: No (Note: For details, please refer to supporting data. 2. Summary Information (Others) (3) Changes in accounting policy, changes in accounting estimates or restatement due to correction on Page 5.) (4) Number of shares issued and outstanding (common stock) 1) Number of shares issued and outstanding at First quarter the end of the period (including treasury stock) of FY2012 2) Number of shares of treasury stock at the First quarter end of the period of FY2012 3) Average number of shares during the period First quarter of FY2012 394,757,494 shares FY2011 394,751,494 shares 253,961 shares FY2011 250,439 shares 394,502,066 shares First quarter 394,473,510 shares of FY2011 (* Presentation of status of implementation of the quarterly review process) The review process of the quarterly consolidated financial statements for this period in accordance with the Financial Instruments and Exchange Law has been completed at the point of disclosing this. (* Disclaimer regarding Forward-looking Statements) This report contains forward-looking statements, which are based on the information currently available and certain assumptions the Company considers to be reasonable. Actual results, performance, achievements or financial position may be materially different from any future results, performance, achievements or financial position expressed or implied by these forward-looking statements. For assumptions on which forward-looking statements are based as well as for precautionary statements in the use of forward-looking statements, please refer to 1. Qualitative Information on the Quarterly Results of Consolidated Operations (3) Qualitative Information on Forecast of Consolidated Results on Page 4. Note: This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, the original shall prevail.
Table of Contents of Accompanying Materials 1. Qualitative Information on the Quarterly Results......2 (1) Qualitative Information on the Results of Consolidated Operations...2 (2) Qualitative Information on the Changes in the Consolidated Financial Position...3 (3) Qualitative Information on Forecast of Consolidated Results...4 2. Summary Information (Notes)......5 (1) Changes in significant subsidiaries during the period......5 (2) Adoption of special accounting treatment used in preparation of the quarterly consolidated financial statements...5 (3) Changes in accounting policy, changes in accounting estimates or restatement due to correction...5 3. Consolidated Financial Statements...6 (1) Consolidated Balance Sheet...6 (2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income...8 Consolidated Statements of Income Consolidated Statements of Comprehensive Income (3) Notes on going concern assumption...10 (4) Segment information...10 (5) Notes on significant changes in the amount of shareholders equity (if any)...11 (6) Subsequent events......11-1 -
1. Qualitative Information on the Quarterly Results (1) Qualitative Information on the Results of Consolidated Operations The Japanese economy during the first quarter of fiscal 2012 (April 1, 2012, to June 30, 2012) showed signs of a modest recovery due to full-fledged public investment accompanying earthquake reconstruction in addition to brisk personal consumption against a background of such factors as the reinstatement of subsidies for the purchase of environmentally friendly vehicles. Nevertheless, uncertainties about the future continued in Japan and overseas due to sluggish stock prices and concerns about and the impact of increases in the consumption tax and electric power rates in Japan along with the European debt crisis and economic slowdowns in the United States and China overseas. In the department store sector, total department store sales in Japan during April increased year on year owing to a rebound from the adverse impact of the Great East Japan Earthquake in the previous year. However, harsh conditions persisted and sales for the first quarter of the fiscal year declined from the same quarter of the previous fiscal year. Amid this environment, the Isetan Mitsukoshi Group progressed with the creation of a structure to become my indispensable department store for each individual customer throughout his or her life by continually creating high-quality, new lifestyles and being of use to our customers in their many different roles in life. By doing so, we aim to become the world s foremost retail and services group with high profitability and sustained growth. As a result, consolidated net sales for the first quarter amounted to 290,360 million, an increase of 0.1% from the first quarter of the previous fiscal year; operating income amounted to 6,905 million, an increase of 38.1%; recurring income was 10,680 million, an increase of 34.3%; and net income was 6,071 million, a decrease of 64.1%. Results by segment were as follows. 1) Department Store Business In the mainstay department store, the Group s foremost strategy is to enhance its three flagship stores, namely the Isetan Shinjuku main store, the Mitsukoshi Nihonbashi main store and the Mitsukoshi Ginza store. Following the reopening of the Mitsukoshi Ginza store with increased floor space in September 2010, we began redevelopment of the Isetan Shinjuku main store during the current year. In May, construction work began on one section of the store s women s merchandise floor. Although this work resulted in decreased sales space compared with in the previous fiscal year, the Isetan Shinjuku main store posted a year-on-year increase in sales during the first quarter. Sales at the Mitsukoshi Nihonbashi main store and the Mitsukoshi Ginza store were also favorable. The grand opening of the redeveloped Isetan Shinjuku main store is scheduled for spring 2013. Sales at domestic Group department stores outside the Tokyo Metropolitan region during the first quarter were virtually at the same level as in the previous fiscal year. Of particular note, sales rose above the levels recorded in the previous year in several regions, beginning with Sendai, where sales are expanding following the earthquake reconstruction, in addition to Niigata, Hiroshima and Takamatsu. We are also opening new small-size stores to expand and enhance customer contact. As one such store, on April 20 we opened the Isetan Haneda Store, which mainly offers men s miscellaneous items and food gifts, at Haneda Airport Domestic Terminal No. 1. The Shinjuku Mitsukoshi ALCOTT Store, which we operated in the specialty store, terminated operations on March 31, 2012 along with the leasing of the entire building to an external party. Overseas, despite the trend toward a slight slowing in economic growth rates, we strived to cultivate and deeply penetrate markets in China and Southeast Asia, where continued robust growth is expected, with the objective of strengthening the Group s earnings foundation. On May 11, we opened a new store, the One Utama Store, in the state of Selangor in Malaysia, making this our fourth store in Malaysia. In autumn 2012, we plan to open our second store in Tianjin, China. Similarly, we intend to open our second store in Chengdu, China, at the end of 2014. As a result, segment sales amounted to 262,641 million, a decrease of 0.1% from the first quarter of the previous fiscal year, and operating income was 4,853 million, an increase of 86.9% from the first quarter of the previous fiscal year. - 2 -
2) Credit & Finance Business/Customer Organization Management Business MICARD Co., Ltd. and MI TOMONOKAI Co., Ltd. worked to expand membership while building a high-profit foundation. At some stores, we also commenced a service for accepting new MICARD memberships using tablet PCs and worked to reduce the time required to handle procedures and simultaneously accept applications for Tomonokai shopping cards and shopping certificates. These and other efforts were aimed at raising customer convenience and enhancing the efficiency of operations. As a result, segment sales amounted to 8,045 million, an increase of 8.1% from the first quarter of the previous fiscal year, and operating income was 1,790 million, an increase of 40.6% from the first quarter of the previous fiscal year. 3) Other Retail & Specialty Store Business In the other retail & specialty store, Isetan Mitsukoshi Food Service Ltd., which engages in food manufacturing and supermarket, worked to raise the satisfaction level of local customers by providing safe and reassuring products and highly original top-quality products that utilize its own self-manufacturing function. As its first new store, on June 29 Isetan Mitsukoshi Food Service opened the Queen s Isetan Fujimino Store in Shopping Center Soyoka Fujimino in Fujimino city, Saitama Prefecture. Because of a temporary increase in costs accompanying the opening of this store, however, profits at Isetan Mitsukoshi Food Service declined. Isetan Mitsukoshi Direct Shopping Ltd., which engages in mail-order shopping, worked to provide highly convenient services. Besides its traditional online, catalog and TV mail order shopping services, Isetan Mitsukoshi Direct Shopping is providing the Isetan Mitsukoshi MI Deli membership-based foods home delivery service, which began in autumn 2011. As a result, segment sales amounted to 20,668 million, a decrease of 2.7% from the first quarter of the previous fiscal year, and operating loss was 400 million compared with an operating income of 4 million in the first quarter of the previous fiscal year. 4) Real Estate Business In the real estate, Isetan Mitsukoshi Building Management Service Co., Ltd. worked to build sales support operations as well as reinforce energy saving and disaster prevention related operations. As a result, segment sales amounted to 6,939 million, an increase of 44.0% from the first quarter of the previous fiscal year, and operating income was 209 million, an increase of 42.8% from the first quarter of the previous fiscal year. 5) Other Businesses In the other es segment, Group companies carried out operations to provide sales and marketing support and raise productivity. These companies include Isetan Mitsukoshi System Solutions Ltd., which is engaged in data processing services; Isetan Mitsukoshi Business Support Ltd., a logistics company; and Isetan Mitsukoshi Human Solutions Ltd., a personnel services company. As a result, segment sales amounted to 16,183 million, a decrease of 0.9% from the first quarter of the previous fiscal year, and operating income was 379 million, a decrease of 56.0% from the first quarter of the previous fiscal year. (2) Qualitative Information on the Changes in the Consolidated Financial Position Total assets at the end of the first quarter amounted to 1,206,308 million, a decrease of 21,638 million from the end of the previous fiscal year. Total liabilities amounted to 729,436 million, a decrease of 30,031 million from the end of the previous fiscal year. Net assets amounted to 476,872 million, an increase of 8,393 million from the end of the previous fiscal year. This was due mainly to an increase in retained earnings. - 3 -
(3) Qualitative Information on Forecast of Consolidated Results Regarding our forecast for the cumulative second quarter and the full fiscal year, net sales, operating income and recurring income are generally proceeding according to plan. However, along with the recording of an extraordinary loss due to a loss on sales of property and equipment in the first quarter, we have revised our second quarter and full-year forecast of net income to 9,000 million and 29,000 million, respectively. - 4 -
2. Summary Information (Notes) (1) Changes in significant subsidiaries during the period (2) Adoption of special accounting treatment used in preparation of the quarterly consolidated financial statements Calculation of tax expenses The effective tax rate on income before income taxes for the fiscal year after the application of tax effect accounting is reasonably estimated, and that estimated rate is applied to income before income taxes for the quarterly period to calculate estimated tax expenses. (3) Changes in accounting policy, changes in accounting estimates or restatement due to correction - 5 -
3. Consolidated Financial Statements (1) Consolidated Balance Sheets (Millions of yen) Fiscal 2011 (As of March 31, 2012) 1Q of Fiscal 2012 (As of June 30, 2012) ASSETS Current assets Cash and bank deposits 39,137 35,603 Notes and accounts receivable trade 105,895 103,540 Marketable securities 268 228 Merchandise and finished goods 54,856 56,173 Work in process 118 132 Raw materials and supplies 1,079 1,127 Other current assets 62,323 46,139 Less: Allowance for doubtful accounts (3,470) (3,436) Total current assets 260,208 239,510 Property and equipment Tangible fixed assets Buildings and structures, net 175,969 174,271 Land 536,702 535,537 Other tangible fixed assets, net 21,011 21,724 Total tangible fixed assets 733,684 731,534 Intangible fixed assets Software 13,332 12,998 Other intangible fixed assets 35,488 35,480 Total intangible fixed assets 48,821 48,478 Investments and other assets Investment securities 84,894 88,153 Other assets 100,965 99,291 Less: Allowance for doubtful accounts (693) (717) Total investments and other assets 185,167 186,727 Total property and equipment 967,673 966,740 Deferred assets Bond issue costs 65 58 Total deferred assets 65 58 Total assets 1,227,947 1,206,308-6 -
(Millions of yen) Fiscal 2011 (As of March 31, 2012) 1Q of Fiscal 2012 (As of June 30, 2012) LIABILITIES Current liabilities Notes and accounts payable 111,791 101,570 Short-term borrowings 22,964 27,068 Commercial paper 24,000 50,000 Income taxes payable 3,893 2,383 Reserve for loss from redemption of gift vouchers 22,886 22,527 Allowance 13,674 7,850 Other current liabilities 203,880 163,859 Total current liabilities 403,089 375,260 Long-term liabilities Bonds payable 24,000 24,000 Long-term debt 102,300 102,300 Deferred tax liabilities 158,769 159,203 Reserve for accrued employees retirement benefits 39,602 39,864 Allowance 33 28 Negative goodwill 13,234 9,925 Other long-term liabilities 18,438 18,852 Total long-term liabilities 356,378 354,175 Total liabilities 759,467 729,436 NET ASSETS Shareholders equity Common stock 50,102 50,105 Capital surplus 325,061 325,064 Retained earnings 103,823 105,949 Less: Treasury stock (233) (236) Total shareholders equity 478,754 480,882 Accumulated other comprehensive income Net unrealized gains (losses) on other securities (5,604) (5,298) Deferred gains (losses) on hedges 1 (5) Foreign currency translation adjustments (16,567) (11,604) Total accumulated other comprehensive income (22,170) (16,908) Stock acquisition rights 1,246 1,202 Minority interests 10,648 11,696 Total net assets 468,479 476,872 Total liabilities and net assets 1,227,947 1,206,308-7 -
(2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income Consolidated Statements of Income First Quarter Period (Millions of yen) 1Q of Fiscal 2011 (From April 1, 2011, to June 30, 2011) 1Q of Fiscal 2012 (From April 1, 2012, to June 30, 2012) Net sales 289,951 290,360 Cost of sales 207,771 208,396 Gross profit 82,180 81,964 Selling, general and administrative expenses 77,179 75,059 Operating income 5,001 6,905 Non-operating income Interest income 233 230 Dividend income 328 340 Amortization of negative goodwill 3,308 3,308 Equity in earning of affiliates 284 498 Other non-operating income 442 514 Total non-operating income 4,597 4,892 Non-operating expenses Interest expenses 449 396 Other non-operating expenses 1,199 721 Total non-operating expenses 1,648 1,117 Recurring income 7,949 10,680 Extraordinary loss Loss on sales of property and equipment 200 935 Loss on disposal of property and equipment 291 Loss on valuation of investment securities 31 1,060 Merger related expenses 379 Total extraordinary loss 611 2,287 Income before income taxes and minority interests 7,338 8,392 Income taxes (9,847) 2,149 Net income before minority interests 17,186 6,242 Minority interests in earnings of consolidated subsidiaries 289 171 Net income 16,896 6,071-8 -
Consolidated Statements of Comprehensive Income First Quarter Period (Millions of yen) 1Q of Fiscal 2011 (From April 1, 2011, to June 30, 2011) 1Q of Fiscal 2012 (From April 1, 2012, to June 30, 2012) Net income before minority interests 17,186 6,242 Other comprehensive income Net unrealized gains (losses) on other securities (389) (266) Deferred gains (losses) on hedges (3) (6) Foreign currency translation adjustments 1,083 2,220 Amount corresponding to equity interest in equity method affiliates (25) 4,212 Total other comprehensive income 665 6,160 Comprehensive income 17,852 12,403 (Breakdown) Comprehensive income attributable to parent company shareholders 17,131 11,333 Comprehensive income attributable to minority shareholders 720 1,069-9 -
(3) Notes on going concern assumption First quarter consolidated accounting period (April 1, 2012, to June 30, 2012) (4) Segment information I. First quarter consolidated accounting period (April 1, 2011, to June 30, 2011) 1. Information Concerning Segment Sales, Income and Losses Sales Department store Credit & finance / Customer organization management Reporting segments Other retail & specialty store Real estate Subtotal Other es (Note 1) Total (Millions of yen) Amount listed on quarterly Adjusted Consolidated amounts Statement of (Note 2) Income (Note 3) (1) Sales to outside customers 262,610 3,728 17,967 2,387 286,694 3,257 289,951 289,951 (2) Intersegment sales or transfer 166 3,714 3,276 2,432 9,590 13,072 22,662 (22,662) Total 262,776 7,443 21,244 4,820 296,284 16,329 312,614 (22,662) 289,951 Segment income 2,597 1,273 4 146 4,021 862 4,884 116 5,001 Notes 1. The other es segment includes the services of manufacturing, exporting, importing, wholesaling, distribution, temporary personnel and data processing that are not included in other reporting segments. 2. The segment adjusted income of 116 million is an intersegment elimination. 3. Segment income is adjusted with operating income. 2. Items concerning impairment of fixed assets or goodwill - 10 -
II. First quarter consolidated accounting period (April 1, 2012, to June 30, 2012) 1. Information Concerning Segment Sales, Income and Losses Sales Department store Credit & finance / Customer organization management Reporting segments Other retail & specialty store Real estate Subtotal Other es (Note 1) Total (Millions of yen) Amount listed on quarterly Adjusted Consolidated amounts Statement of (Note 2) Income (Note 3) (1) Sales to outside customers 262,206 4,012 17,371 3,292 286,883 3,477 290,360 290,360 (2) Intersegment sales or transfer 434 4,032 3,296 3,647 11,411 12,705 24,117 (24,117) Total 262,641 8,045 20,668 6,939 298,294 16,183 314,477 (24,117) 290,360 Segment income (loss) 4,853 1,790 (400) 209 6,453 379 6,832 72 6,905 Notes 1. The other es segment includes the services of manufacturing, exporting, importing, wholesaling, distribution, temporary personnel and data processing that are not included in other reporting segments. 2. The segment adjusted income of 72 million is an intersegment elimination. 3. Segment income (loss) is adjusted with operating income. 2. Items concerning impairment of fixed assets or goodwill. (5) Notes on significant changes in the amount of shareholders equity (if any) First Quarter of Fiscal 2012 (From April 1, 2012, to June 30, 2012) (6) Subsequent events - 11 -